Bitcoin jumped from $62,000 to above $77,000 within a few days last week, crushing traders who had leaned short during the pullback and driving derivatives liquidations to $3 billion. For professional trading firms, though, the move created an opportunity that does not depend on calling the next direction in price.
According to onchain tracking firm Lookonchain, crypto market makers and trading firms including Abraxas Capital, Fasanara Capital, and Wintermute have quietly built perpetual futures short positions worth hundreds of millions of dollars on Hyperliquid, an onchain derivatives exchange.
The data shows the three firms together holding short exposure of 138,569 ETH, valued at about $338 million, along with 3,425 BTC worth about $265 million.
Spot on one side, perpetual shorts on the other
At the same time, blockchain analytics platform Arkham Intelligence shows Abraxas Capital pulling large amounts of spot assets off centralized exchanges. Over the past four days alone, the firm withdrew 73,872 ETH from Binance, valued at $173 million.
This structure, holding spot while shorting an equivalent amount of perpetual futures, is commonly known as cash-and-carry arbitrage or a basis trade. In crypto bull markets, it is one of the most common lower-risk yield strategies. The trade is not built on a directional view. It is built on collecting funding.
The mechanics are straightforward. A trader buys the spot asset and shorts an equivalent perpetual futures position. Gains and losses on the two legs largely offset each other, which sharply reduces exposure to outright price swings. The profit comes from the funding rate paid on perpetual contracts. When the market is heavily tilted long, long-position holders make periodic payments to shorts to keep perpetual prices aligned with spot.
Positive funding has reopened the carry trade
Coinglass data shows Bitcoin funding rates across major exchanges staying firmly positive, at roughly 0.01% every eight hours. Coinalyze data adds that aggregate Bitcoin perpetual funding is around 0.0109% per hour, while Ether is around 0.0087% per hour. Using this setup, annualized returns can reach the high single digits, a meaningful stream of passive income for institutions deploying hundreds of millions of dollars.
21Shares Capital Markets said that while Bitcoin basis levels remain elevated, funding rates are still within what it described as a normal range. In its view, that leaves the strategy attractive and does not yet point to an overheated market.
Crypto data protocol Aegis provided a more specific snapshot. As of Aug. 24, the 30-day average annualized funding rate on Bitcoin perpetual futures had recovered to 6.7%, while the seven-day average had risen to 8.7%.
That marks a sharp reversal from the previous few months, when the strategy had offered little reward. Glassnode data shows that as Bitcoin retreated from its all-time high and leveraged longs gradually closed out, funding rates from February through July were mostly weak and at times negative. When longs stop paying shorts, the core revenue stream for basis traders disappears. In a negative funding environment, the short leg can even become a cost center.
This month’s rally changed that quickly. As rising prices forced out leveraged shorts, funding rates swung back into positive territory and reopened the door for cash-and-carry traders.
The trade is not limited to Bitcoin and Ether. 21Shares Capital Markets said basis opportunities are relatively rich across major digital assets, and named Solana (SOL) as another token with elevated funding rates that suits arbitrage strategies.
Institutional positioning is growing, and some capital may be turning directional
The appetite for these trades has also spread into traditional finance venues. Glassnode data shows open interest in CME Bitcoin futures rising over the past several weeks from about 87,000 BTC to 122,000 BTC.
CryptoQuant, however, highlighted a less typical development: hedge funds on CME have recently shifted to a net-long position in Bitcoin futures. In a standard cash-and-carry setup, those players would usually sit net short. The change suggests that at least part of the institutional market is no longer content with neutral, lower-risk arbitrage and is instead betting that Bitcoin can keep moving higher.
Leverage has also been building in Ether markets. According to Coinalyze, total open interest in Ether perpetual futures has climbed to $14 billion, a multi-month high, even as the latest leg of the rally has appeared to stabilize.
Crowded longs leave the structure exposed
The widening arbitrage spread does not remove risk from the broader market. Crypto trader @LLuciano_BTC said positive funding has returned, but Bitcoin has still struggled to produce a decisive upside break, leaving market structure relatively fragile. If positioning turns one-sidedly bullish before price confirms a breakout, a downside move could trigger cascading liquidations in long positions. If price breaks higher instead, shorts may be forced to chase.
Another trader, @misterrcrypto, also warned that the rally has piled up overly crowded leveraged longs. If upside momentum stalls, the odds of a violent shakeout or a deep pullback would rise sharply, potentially disrupting arbitrage books on both sides of the market.
The data now on the table points to the same conclusion. After several months of weak funding, the return of positive rates has revived cash-and-carry as a major institutional trade. Market makers, trading firms, and some traditional finance participants are expanding positions around that setup, even as the build-up in leveraged long exposure leaves the market more sensitive to a sudden reversal.